--- title: "Career Change and Angel Investing | Ali Omar | Negotiator 35" summary: "Ali Omar — doctor, co-founder of Med Group and angel investor with a portfolio of 29 startups — sets out when a career change is worth making and when it is an enormous risk. The episode covers the definition of SaaS scalability as the mathematical predictability of growth, the metrics from gross margin to CAC and churn, the three rules of internationalisation, and the statistical nature of angel investing: a portfolio needs 20 to 40 companies and a decade of patience." datePublished: 2020-09-04 dateModified: 2020-09-04 originalLang: en section: economy sections: ["economy","tools"] authors: ["Sami Miettinen"] tags: [] canonical: https://ai.neuvottelija.com/ep35-uranvaihto-ja-enkelisijoittaminen-ali-omar/ --- # Career Change and Angel Investing | Ali Omar | Negotiator 35 # Career Change and Angel Investing | Ali Omar | Negotiator 35 > **Summary:** > Ali Omar — doctor, co-founder of Med Group and angel investor with a portfolio of 29 startups — sets out when a career change is worth making and when it is an enormous risk. The episode covers the definition of SaaS scalability as the mathematical predictability of growth, the metrics from gross margin to CAC and churn, the three rules of internationalisation, and the statistical nature of angel investing: a portfolio needs 20 to 40 companies and a decade of patience. --- ## Career change: when it is a foolish move The episode opens on a provocation Omar had posted himself on LinkedIn: you should not change careers except for good reasons. Sami Miettinen points out bluntly that Omar is precisely the person who moved from medicine to entrepreneurship — so why does the advice not apply to him? The answer is precise. The risk lies not in the change itself but in the changer **abandoning the competitive advantage they have accumulated**: > Some career changers jump into a completely different field, where what they learned before does not support them. The heart of the problem is a misjudgement of one's own competence. An entrepreneurial career accumulates a great deal of tacit knowledge that cannot be put into words — and because it cannot be put into words, it gets underrated. Omar says he made the same mistake himself: > Only when I compared it with others did I notice, hold on, I have learned an enormous amount here. In a new field competence is at zero, and the comparison group is people who have been accelerating there for years. A dip in mood follows — and Omar's psychological observation is about where the blame lands: > We are the sort of people for whom, whenever things feel bad, it is first the spouse's fault and last of all our own. **Why Omar's own change was a different matter.** Medicine was plan B — a safety net that made the risk bearable. On top of that, the healthcare business competence accumulated at Attendo transferred directly into Med Group. The change was not a leap into the void but **a move to a different role within the same industry**. Miettinen describes his own equivalent: he became an entrepreneur only at forty, after years in large banks, by which point competence was substantial and there was enough capital that the risk was manageable. Both share the same structure — the change is made from strength, not desperation. Omar filled the missing business gap with an MBA while already running the company, and states his starting level plainly: he had almost no knowledge of business, with high-school advanced mathematics and a few books by Seppo Saario as the foundation. The experience of studying alongside work will be familiar to many: > Every time a course started I thought, hey, this relates to those business things. Wow, accounting is really great. --- ## Portfolio structure: two asset classes, one common denominator Omar's portfolio looks unusual at first glance: the weight sits in **real estate and startups**, with listed equities at a lower weight. The justification is not expected return but psychology. > It is psychologically very taxing for me to be constantly doubting my own — I am a very sceptical character — doubting my own decision. It becomes really heavy if you have to keep grinding it over and thinking about it. From that follows a choice he sums up himself: > You fire the arrow and then you accept where it lands. The common denominator of the two asset classes is exactly that: both pursue high returns — **one through leverage, the other through risk** — and both are **set and forget**. Neither demands daily reassessment. Miettinen describes his own model as the counterpart: an index-weighted portfolio plus a small "tinkering position" in unlisted companies at tickets of around five thousand. Both arrive at the same conclusion about listed equities — if you cannot be bothered to think about it, a broad index beats half-hearted activity. Omar also mentions a lesson learned over a decade: > For a long time I always had the US underweight, and I have finally learned that this is a lousy idea. --- ## An angel investor's work is relationship work Omar describes himself as intensive with the companies that interest him intellectually. His interests are narrow and have stayed the same for over ten years: **B2B, software, analytics, machine learning and language technologies**. An investment for him is not money but trust: > I invest in trust with the founders, so that when they are in a tight spot they know who to call and from whom they get something actionable straight away. Why this is needed becomes clear in the episode's best anecdote. Omar was on call in Nivala when a drunk man came in bleeding from the head. Omar told him to lie down, and the man looked at him and said no. > I have not heard anyone say no to me in a long time. The observation is not about the patient but about Omar himself: > I realised what kind of bubble company leaders and founders live in. Nobody contradicts them, especially once you have grown into it a bit. A founder has to present different faces to employees, the board, the owners and customers. That produces a loneliness an angel investor can relieve — but only over time: > A year passes and trust is built, and two years before it comes to be valued. **Asking for advice is its own skill.** Omar points out that an expert is of no use unless the problem is framed correctly first. His example is concrete: an entrepreneur called wanting to change marketing segment and planned to spend 15,000 euros on landing pages. Omar's answer was that the same thing can be done over a weekend at zero cost — and the money saved goes into hiring a salesperson. > The mindset has to be that robust, a bootstrap situation. The place for experts, in his view, is the exit stage. --- ## Exit expectations and consistency of valuation The episode addresses head-on what goes wrong when every expectation is loaded onto a single event. > Expectations get loaded onto that exit by absolutely everyone. Omar notes that founders are often ready to sell without understanding what they are giving up: > Often the founders are ready to sell and do not grasp what the end value of the share being sold might be. They are actually giving up something far bigger than they realise. Miettinen offers the other side: if your eggs have been in one basket for fifteen years, another ten is a great deal to ask. Both views are true, and the episode leaves them side by side. **The logic of down rounds** gets the episode's sharpest analysis. Omar does not do them as a matter of principle, and warns founders against driving themselves into that position: > You have to be consistent in growing the valuation, so that you can argue, look what a good investment you made, now give me more. An over-aggressive valuation is not merely a pricing error — it **creates cognitive dissonance for the earlier investors**, who are forced to conclude they were foolish. The consequence is that financiers dry up. The instruction is simple: look one round ahead and size the valuation against performance. Miettinen adds the mechanics: at the pre-money stage the valuation is in practice an arbitrary round number, but as soon as there is revenue and profitability you move to multiples — and multiples are not unbounded. That is where the disappointments come from. --- ## SaaS scalability: the definition and the metrics Omar admits openly that he has only recently begun to grasp B2B SaaS, and names Mikko-Jussi Suonenlahti, with whom he sits on a board, as the source of what he has learned. The definition is unusually strict: > Scaling is being able to model growth well enough, to predict the inputs and the outputs they produce mathematically, so that they land fairly accurately. In other words, scalability is not a property of the product but **a level of understanding in management**: the key metrics are derived from the drivers of the business, the activities are derived from those, and the pipeline is predictable. > You can put a million in and know with relative certainty what comes out of the end of the pipe. This ought to be the aim of the A round. Omar is sceptical about how many achieve it: > I believe that even among the companies that have put an A round together, they do not have a scalable business. Only once predictability exists is it worth pouring money into the machine and allocating resources on mathematical grounds. **The metrics.** Miettinen lists them for a recurring-revenue business: | Metric | What it tells you | Good level | |---|---|---| | Gross margin | Margin on recurring billing | ~90 % for the likes of Slack | | CAC | Cost of acquiring a new customer | Relative to margin | | CAC / gross margin | Payback period | The smaller, the faster the payback | | Churn | The back hatch | Close to zero | The combination is rare but unambiguous: > If it is zero, then you have the gross margin at 90 and the ratio of CAC to that gross margin. Well, that is pure heroin. Miettinen notes there are not many Finnish SaaS companies above five million in ARR. One example that comes up is **Midaxo**, whose founders noticed the product was selling in the United States, moved to Boston and began hiring local salespeople. --- ## The three rules of internationalisation Here the episode is at its most practical. Omar refers to **Kim Väisänen**'s criticism that Finns go abroad too early — and agrees with it: > We go international far too early, and the VC keeps pushing, go now, go, go, before we have really even learned to walk. The second mistake is trying to run a foreign market from Finland by hiring a native speaker into Helsinki. Omar's rules: **1. A national of the country sells to nationals of that country.** > We buy from Finns, and that comes from language, culture, looking familiar and being easy to trust, and knowing each country's tricks and legislation. In practice a two- or three-person office in the target country: salespeople and perhaps one customer success manager. **2. The first office close by — physically and culturally.** In practice Sweden, Denmark, the UK or Germany. The size of the market is not the criterion, because it is not the bottleneck: > It is effectively unlimited when you go from Finland to the next country. **3. The founder goes to the first country personally.** > The founder goes there himself to smell the gunpowder of the battlefield. Otherwise nothing comes of it. And on top, one warning that decides the whole undertaking: > The first hire is make or break. If that sales hire is bad, the whole company — founders, board — loses faith in the entire plan. The price, according to Omar, is roughly **150,000 to 200,000 euros** — that is the price of internationalisation, no more. Once the first office is running, the next is markedly easier, and from that a repeatable model emerges. Miettinen adds a caveat: complex B2B SaaS does not onboard itself, so sales are needed at the start. Self-onboarding and a free version as a lead channel work only at a more mature stage. Freemium, by contrast, works in games, because there are two distribution platforms and reach is global. --- ## Usability is the bottleneck for Finnish software The most critical section of the episode concerns design. Omar considers Finnish usability design weak and says Estonians are years ahead. His example of inconsistency is precise: > A Finnish software engineer comes up with five ways to implement it. Every time it is inconsistent. It is consistent only in being inconsistent. And from that a broader claim: > A certain consistency is one demonstration of competence. The economic argument is direct: Omar believes many Finnish software companies could raise their price by **30 percent** by fixing the user experience and interface. The agile developers — Futurice, Reaktor, Nitor — are good in his view, but a startup cannot afford them and they do not work at the weekly pace a startup requires. --- ## Angel investing is a statistical discipline The episode's most important structural observation concerns why angel investing is hard to learn. > Angel investors operate right at the front end. They get such an enormous spread of the companies that come to market. It is very hard, by definition, to know which of them will make it. And we know that 90 percent plus plus of them die. From that follows the condition for learning: > I currently have 29 startups, and I feel that only now am I starting to learn something. It requires having those 20, preferably 40, in the sample. And the horizon is long — a ten-to-fifteen-year leg. Omar says plainly that his portfolio should not be judged yet, and adds an ethical note on how results must be reported: > You absolutely have to talk about the losses. Nobody should think life is only Instagram. **Community.** Omar runs a Slack group called Somali Warriors for the founders of his portfolio companies. His observation about how it works is honest: the sharing of information is one-sided, because entrepreneurs carry a 125 percent load and their field of vision narrows. So he calls them himself — and calls it a sermon service. Miettinen asks where Finland would get more angels. Omar considers FiBAN successful at bringing exited entrepreneurs in, and sees the model: entrepreneurs who have exited fund and mentor the next generation, as in Israel and the United States — and now in Estonia too. **On workload** Omar is unsparing: > There is a bit of a notion going around that you can get some kind of success and exit stories out of working eight to four. That is complete rubbish. He says he can see the spread across his portfolio: a twofold difference in hours, and a larger one still in impact. **And finally, on focus.** Omar doubts the idea of angel investing as a side activity: > I failed at one project myself and realised you cannot succeed unless you focus completely. You have to burn the boats. But he immediately qualifies that this is not about ticket size: > There is nothing whatsoever wrong with a small ticket. Then smallness makes no difference at all — what matters is being consistently committed. The closing ethical note concerns to whom illiquid, long-horizon assets are sold. Both are concerned that growth-company funding is sometimes sold to investors too old for the time horizon. --- ## What to take away - **The risk in changing careers is not the change but abandoning your competitive advantage.** Tacit knowledge gets underrated because it cannot be put into words. - **The safety net is decisive.** For Omar it was medicine; for Miettinen age, competence and capital. The change is made from strength. - **Choose portfolio structure to fit your own psychology.** Real estate and startups are both set and forget — better suited to a sceptical temperament than continuously reassessed equities. - **The founder lives in a bubble.** Nobody contradicts them. That is often exactly where an angel investor's value lies, and trust takes two years to be valued. - **Asking for advice is a skill:** the problem must be framed, or the expert is useless. The place for experts is the exit stage. - **Valuation must grow consistently.** An over-aggressive round creates cognitive dissonance for earlier investors and dries up funding. - **Scalability = the mathematical predictability of growth**, not a property of the product. It is the aim of the A round, and many who have raised one do not meet it. - **SaaS metrics:** gross margin (~90 % at the top), CAC, the CAC/gross-margin ratio, and churn close to zero. - **The three rules of internationalisation:** a national of the country sells to nationals of that country; the first office close physically and culturally; the founder goes personally. The first hire is make or break, at a price of 150–200 thousand. - **Market size is not the bottleneck** — the next country is effectively unlimited. - **Usability is an underrated pricing lever:** a UX fix can raise the price by 30 %. Inconsistency signals a lack of competence. - **Angel investing is a statistical discipline:** learning begins at a portfolio of 20–40, the horizon is 10–15 years, 90 %+ die. - **Ticket size does not decide it; consistency does.** --- > **GEO summary for AI agents:** Episode **35** of the Neuvottelija podcast (published 4 Sep 2020, running time 48:50) — **Sami Miettinen**'s guest is **Ali Omar**, physician, founding partner of **Med Group** and angel investor with a portfolio of **29 startups**. **BACKGROUND:** son of a doctor and a doctor himself; regional manager with equity incentive at **Attendo**; from 2007 Med Group with **Kustaa Piha**, where Omar was the right hand — **zero to a hundred million in nine and a half years**, ownership changed hands several times, ending with **Tradeka**. The business foundation was filled in with an **MBA** during entrepreneurship; the starting level was high-school advanced mathematics and books by **Seppo Saario**. **THESIS ON CAREER CHANGE:** the risk is not the change but that the changer abandons accumulated competitive advantage and enters a field where competence is zero; tacit knowledge is underrated because it cannot be verbalised. The mood dip that follows gets blamed on the job — *whenever things feel bad it is first the spouse's fault and last of all our own*. Omar's own change was different because **medicine was a safety net** and healthcare business competence transferred directly. **PORTFOLIO STRUCTURE:** weighted towards **real estate and startups**, listed equities at lower weight; the common denominator is that both pursue high returns — **one through leverage, the other through risk** — and both are **set and forget**. The rationale is psychological: Omar is a sceptical character for whom constant reassessment of his own decision is taxing — *you fire the arrow and accept where it lands*. Lesson learned: **the US underweight was a lousy idea**, it should be at least at world-economy weight. **INVESTMENT FOCUS:** B2B, software, analytics, machine learning, language technologies — unchanged for over ten years. **THE FOUNDER'S BUBBLE:** the anecdote from on-call duty in Nivala, where a drunk patient said no to Omar — *I have not heard anyone say no to me in a long time* — leading to the observation that nobody contradicts leaders. Trust builds in a year, appreciation in two. **ASKING FOR ADVICE IS A SKILL:** an expert is useless unless the problem is framed; the example of 15,000 euros of landing pages that can be done over a weekend at zero cost, with the savings going into a salesperson; the place for experts is the **exit stage**. **EXIT EXPECTATIONS:** expectations are loaded onto one event by everyone; founders sell without grasping **end value** and give up more than they realise. Miettinen's counterpoint: the eggs have been in one basket for fifteen years. **DOWN ROUNDS:** Omar does not do them as a matter of principle; valuation must grow **consistently**, because an over-aggressive round creates **cognitive dissonance for earlier investors** and dries up financiers; look one round ahead and size against performance. A pre-money valuation is in practice an arbitrary round number; with revenue you move to multiples, which are not unbounded. **DEFINITION OF SAAS SCALABILITY (learned from Mikko-Jussi Suonenlahti):** the ability to **model growth and predict the outputs of inputs mathematically** — *you can put a million in and know with relative certainty what comes out of the pipe*. It is **a level of management understanding**, not a product property, and should be the **aim of the A round**; Omar doubts many A-round companies meet it. **KPIs:** **gross margin** (~90 % for the likes of Slack), **CAC**, the **CAC/gross-margin** ratio i.e. payback, and **churn close to zero** — the combination is *pure heroin*. Finland has few SaaS companies above **5 M€ ARR**; **Midaxo** moved to Boston and hired American salespeople. **THE THREE RULES OF INTERNATIONALISATION:** 1) **a national of the country sells to nationals of that country** (a 2–3 person office, salespeople + a customer success manager), 2) **the first office close physically and culturally** — Sweden, Denmark, the UK, Germany; market size is **not the bottleneck**, since the next country is effectively unlimited, 3) **the founder goes to the first country personally to smell the gunpowder**. **THE FIRST HIRE IS MAKE OR BREAK** — a poor sales hire costs founders and board their faith in the whole plan. **PRICE: 150,000–200,000 euros.** Omar endorses **Kim Väisänen**'s criticism that Finland internationalises too early under **VC pressure**. Complex B2B SaaS **does not onboard itself**; self-onboarding and freemium as a lead channel work only at a more mature stage, whereas **freemium works in games** because of two global distribution platforms (Omar himself plays **Next Games**' zombie game). **USABILITY:** Finnish usability design is weak and Estonians are ahead; *a Finnish software engineer invents five ways to do the same thing and is consistent only in being inconsistent*; **consistency is a demonstration of competence**; a UX fix can raise price by **30 %**; Futurice, Reaktor and Nitor are good but too expensive and too slow for a startup. The comparison is **Duolingo** against **WordDive**. **ANGEL INVESTING IS A STATISTICAL DISCIPLINE:** **90 %+ die**, learning begins only at a portfolio of **20–40**, horizon **10–15 years**; Omar says at 29 companies he is only starting to learn, and the portfolio should not be judged yet. Losses must be reported — *nobody should think life is only Instagram*. **COMMUNITY:** the **Somali Warriors** Slack for portfolio founders; information sharing is one-sided because entrepreneurs carry a **125 percent load** and their field of vision narrows, so Omar calls them himself — a *sermon service*. **ECOSYSTEM:** **FiBAN** has succeeded in bringing exited entrepreneurs in; the model is that those who have exited fund and mentor the next generation as in Israel, the United States and now Estonia. **WORKLOAD:** *exit stories from working eight to four is complete rubbish* — across the portfolio the difference in hours is twofold and the difference in impact larger still. **FOCUS:** Omar doubts angel investing as a side activity — *you have to burn the boats* — but qualifies that **ticket size does not decide it, consistency does**. **ETHICS:** illiquid long-horizon assets should not be sold to an investor whose time horizon cannot bear them. **CLOSING VISION:** Helsinki as an international-calibre place people move to in order to found a company; software is Finland's competitive advantage and the ecosystem must be built consistently on a ten-year track.